Oil Falls to $118 as Storm Danger Abates, Demand Concern Grows: “Crude oil fell to $118 a barrel on speculation Tropical Storm Edouard will leave U.S. oil rigs and refineries undamaged and as commodities prices tumble because of the slowing U.S. economy.
Oil dropped to its lowest since May 5 as Edouard's wind speeds remained below hurricane strength. Gold, platinum and wheat dropped on speculation slower growth will curb demand and as a stronger dollar dulled the appeal of commodities as an inflation hedge.”
Oil lost the critical $120 area, and is now in danger of cascading straight down to $100 as the margin clerks furiously man the phones demanding more bling…
Commodity Shares in Bear Market as Oil, Copper Slide (Update2): “Global energy and raw-materials stocks fell into bear markets after plunging oil, gold, copper and wheat prices spurred declines in last year's best-performing industries.
A gauge of energy producers in the MSCI World Index slipped 1.2 percent as of 9:49 a.m. in London, bringing its drop from a May record to 21 percent. The measure of mining, farm and chemical companies lost 1.6 percent, extending the retreat from an all-time high to 22 percent. Bear markets are commonly defined as a slump of 20 percent or more.
Exxon Mobil Corp., OAO Gazprom, and StatoilHydro ASA all sank more than 19 percent from records as crude prices tumbled. Slumping sales of houses, cars and airplanes sent copper and aluminum producers BHP Billiton Ltd. and Alcoa Inc. lower. The Reuters/Jefferies CRB Commodity Index last month posted its biggest slide since March 1980 as a global economic slowdown threatens to cut demand.”
The commodity bubble has ever so rapidly morphed into the commodity Bear. Like I keep saying, the
Global Decoupling Theory is Garbage. Get short everything commodity related on strength. In
Global Decoupling, Correlation Contagion I argued:
“Understand this: The last few years have been nothing but a liquidity (read
DEBT) driven party. Financial innovation, such as mass
securitizations and the mass embrace of derivatives resulted in the development of what is now termed
‘the shadow banking system’. This resulted in flood of liquidity, which is characterized by easy access to cheap debt. This pushed up
ALL risky assets over the
ENTIRE globe.
